Small Business

12/30/2013

You are looking to sell your small business, and you expect the best possible outcome for both you and your company. In order to get exactly what you desire out of the impending sale, you must be forward-thinking enough to define your goals before even thinking of getting your business on the market.

Building the business is about a lot of things. First and foremost, there is that pesky reality of getting out there and doing things: getting to market, cornering the market and, eventually, turning a profit. Little surprise, then, selling the business takes a lot of doing too. After all, you are actually planning for yourself, the lives of your loved ones, and your loyal employees.

Done right, a business succession or sale requires the ability to ask the right questions, let alone have the right answers. And there is no shortage of good questions to ask of yourself, your company, your family, and of course, the potential buyer.

While you can tailor the questions to fit your unique circumstances, here are the four questions the author of the article thinks you need to ponder:

Is seller financing feasible in accomplishing my future endeavors?

How involved do I really plan on being post-sale?

How should I mitigate the emotional connection to my business and my employees?

Should I sign that non-compete?

Obviously, these four questions are not all-inclusive. However, they are a good start.

In the end, the most prudent course of action may be to gather counsel from all of those who have a stake in what may be one of the most significant life event they and you may ever face. Consider soliciting the input of your loved ones, your leadership team, and your employees. Then, once you have determined the best outcome for all concerned, meet with your professional advisors to help you get there.

12/04/2013

The last time I checked, the mortality rate continued to hover right around 100%, which means your business isn’t going to be yours forever. You’re going to sell it, shut it down, or pass it down a generation. An estimated 70% of businesses don’t have a family member capable or willing to assume responsibility. What are you doing to plan for the sale?

When it comes to planning for the future of the family business, do the hard math. Some day you are not going to be there to run it. It is just a matter of time, and there may simply be no family member there to step up to the task, which is something even further from your control. For many a business, and for the betterment of the family, this means a sale. So what are you doing to prepare the business for sale?

It is, indeed, a hard math, and not something that comes easy to most of us. Nor does selling the business you worked so hard to create. Nevertheless, when so much of the family wealth is locked into the business, be sure to consider proven, practical tips for preparing it for a sale.

The problem shared by most sales is that a business is only valuable if it is “acquirable.” The 10 tips largely speak for themselves, but you will want to read the description of each in the original article.

Here they are:

Check Your Ego

Be Irrelevant [aka, do not personally be the “value” to the business]

Become Known

Develop Great Systems

Clean Up the Financials

Make a Profit

Develop Reasonable Expectations

Focus on Continuity

Be Transparent

Maintain Perspective

Remember: selling the business is crucial to your own retirement and the future of your family. Approach the process realistically and early.

For more information regarding Family Business for residents in Independence, MO please visit my web site at http://www.stilleylaw.com/.

11/19/2013

One thing is certain about the relationship with your small business: One day in the future will be the last in your business. Write this on a rock…Are you making plans for that last day?

If you are a small business person, what will your last day at work be like? More to the point, what will your last day at work mean to the business you created? The answer hinges on whether your exit will be by design or by default.

To exit your business by design requires coordinating your personal estate with the estate of the business. Oftentimes the two are intertwined. Ask yourself the question recently posed in the title of a recent Forbes article: “How Will You Leave Your Small Business The Last Time?”

Will you sell it? Apparently as many as a third of business owners surveyed by the author planned to do so. However, the business brokerage industry reports a successful sales record of not much more than 20%.

Going to pass it on to the next generation? Some 14% of survey respondents said they were, but only roughly 30% of family businesses actually continue to the next generation.

In either case, the numbers simply do not add up well for casual business exit planning.

Just as you have worked hard to build your business, it seems you will need to work hard to successfully leave it. Accordingly, plan now for that last day or risk losing your investment by default.

For more information regarding Small Business for residents in Lee’s Summit, MO please visit my web site at http://www.stilleylaw.com/.

10/25/2013

If you have substantial assets or are coming into a windfall from a sudden wealth event such as an inheritance, lawsuit, stock options sale, business sale or from a sports/entertainment contract, there are several money moves you should consider to best protect your new wealth against lawsuits and from others.

The bigger the target the easier and more appealing the target. Sad, but true. Legally speaking, every financial gain brings with it a new amount of risk. Oftentimes, the legal risk is directly proportionate to the size of the financial gain.

So, if you have come into a sudden amount of wealth – whether by windfall, asset sale, or inheritance, etc. – then now is also the time for some immediate asset protection planning.

Structuring your ownership and protection of those assets is an important step you cannot afford to overlook. However, such structuring and protecting can get complicated. Much of what you can do (and cannot do) hinges on the very nature of the assets and the risks themselves.

Thankfully, there are some common strategies worth exploring. Forbes recently offered six proven asset protection strategies to shield both you and your important assets.

Increase liability insurance: insurance is a product to solve risk, after all, and liabilities are exactly the kind of lightning rod to be struck.

Separate assets: shared assets, with a spouse or family members, means doubling the risk on those assets, so separating them into your own accounts (or entirely out of your estate and control) can shield them.

Consider a business structure: the business exists as an entity that is not “you” and its liabilities are not your liabilities, so owning special assets (like rental properties) through an LLC or corporation will work to shield you and your individual assets.

For more information regarding information Estate Planning for residents in Lee’s Summit, MO please visit my web site at http://www.stilleylaw.com/.

10/16/2013

When business owners take these three sets of actions, they’re strongly positioning themselves to not only get the best price for their companies, but to also make certain they and their families become as wealthy as possible. Unfortunately, not all that many business owners are taking these actions.

It is so easy to pour your life into the business. You may even regard the business as your life, especially if you love the work and it is a family business to boot. Unfortunately, for many a business owner the life after the business seldom gets the attention and planning it requires.

If you might wish to sell your business in the future for the good of your future life, then there is much planning to do even now.

Since the business is such an integral part of your personal wealth, and perhaps also of your family wealth, planning time is time well invested. Thinking about, planning for, and knowing when to pull the trigger on the sale is just good life-planning. It can be tricky, too.

Essentially, you must plan to put the business in the right place to be bought, plan to put the family and yourself in the right place to sell, and plan to come to the negotiation table ready to get what you need.

Because your business, your family and your life goals are unique, be sure you “measure twice (at least) and cut once” when it comes to this major event.

There are no mulligans you can use once the ink is dry and the money has changed hands regarding your business sale.

For more information regarding Family Business Law for residents in Independence, MO please visit my web site at http://www.stilleylaw.com/.

10/01/2013

A lot of small business owners accelerated sales of their companies into 2012 in anticipation of the new higher tax rates for 2013, but for those who are thinking of selling now, don’t despair. “There are things you can do to minimize—or with the right set of facts—eliminate taxes.”

Is any of your personal wealth tied up in your business? Well, for some people, the business is their current life, both in time and wealth. Consequently, it can be an especially rude shock to see so much of that wealth snatched away in taxes paid upon the sale of that business.

The tax bite is a bit bigger these days, too.

So, whatever you can do to shelter the business sale from taxation can mean a world of difference for your retirement and even for the whole family. Turns out there are more than a few important tools at your disposal.

First, why is the tax bite bigger these days? The American Taxpayer Relief Act of 2012 (ATRA) befriended a new surtax added through Obamacare and this friendship brought the capital gains tax up from last year’s 15% to 20%, or even a whopping 23.8% for some earners. But wait, there’s more.

An extra provision of ATRA is set to add yet another 1.2% as of the new year. Then add state taxes. It just adds up, and that is really bad math for you.

While you will want to read the original article, here are the three ways:

The ESOP Plan,

The Qualified Small Business Stock Plan, and

The C-to-S Corporation Conversion Plan.

Essentially, the plan (as far as capital gains taxes) is to either find a way to defer the taxation until you leave assets to your heirs (to secure the capital gains eliminating stepped-up basis), to fall under a discounted category, or to actually change the form of the business so as to skate right below that low ceiling.

There are a few more ways of doing any one or all of these steps cleanly and efficiently, especially with those with the foresight to plan well in advance.

For more information regarding Estate Planning for residents in Lee’s Summit, MO please see my web site at http://www.stilleylaw.com/.

You Really Don’t Matter. Ouch! Buyers simply want to buy a business that is profitable in-and-of itself. When you, the owner, are not the greatest asset of the business, then the business is generally considered to be more attractive.

Buyers Know Which Employees They Will Keep. That is right. Over the years, you may have hired family and friends as employees. While you value them, the buyer may not. In fact, the buyer likely has his or her own family and friends to employ.

Even Good Debt May Catch Up to You. Debt is debt. The red and black ink on your business ledger can get in the way, especially if it is not structured properly.

Handshakes and Signatures May Do You In. Your business wheeling and dealing may kill the deal. In other words, the buyer will have to contend with those agreements, promises, and sheer liabilities you have incurred building your business. This is commonly a problem when “agreements” were done on the fly, never reduced to writing or barely a handshake. A disadvantageous agreement penned in black and white can be as damaging as a solid agreement can be lucrative. It is the proverbial two-edged sword.

Your Business May Be Your Accountant’s Biggest Annuity. Not only may family and friends get their paycheck under your signature, but so do various professional advisors. This can create (potential) conflicts of interest. Just be alert. If outside advisors find their “rice bowls” threatened, then they may drag their feet or at least be less than helpful.

The original article goes into much more detail, with even a bit more brow-beating.

Bottom line: the sale of your business is fraught with many challenges. Proper planning is key to navigating them successfully.

For more information regarding information about Small Business for residents in Blue Springs, MO please see my web site at http://www.stilleylaw.com/.